Accruals or receipt of a capital nature Flashcards
Sec 102 of Tax Administration Act
The burden of proof is on the taxpayer to prove that an amount is of a capital nature.
Visser case
The intentions of the taxpayer need to be determined.
Is it a scheme of profit-making/an asset sale
Nussbaum case
The court tests evidence against the surrounding and circumstantial facts in order to establish the taxpayer’s true intention.
Tuk case
All receipts and accruals must be categorized as either an income or a capital.
Pick n’ Pay case
Amounts = Revenue if they qualify as receipts made by an operation of a business in carrying a scheme for profit-making.
Elandsheuwel case
The intention of a company’s shareholders could be attributed to the company itself
Nel case/ Richmond Estates case
The decision to sell an asset originally held as an investment is not necessarily regarded as a transformation of the profits from a capital nature to a revenue nature. Something more than the disposal of the asset is required for the proceeds to be of a revenue nature.
Natal Estates case
From a view of facts, one should enquire whether it can be said that they have crossed over the Rubicon and gone over to the business or embarked on a scheme of profit-making.
COT case
When the purposes regarding an asset are mixed, one should seek and give effect to the dominant factor that induced the taxpayer to acquire the asset
Nussbaum case
When a taxpayer who intends to invest in an asset, has a secondary, profit-making purpose when the asset is purchased and sold, the proceeds will be more of an income nature
Beleggings case
The taxpayer receives an amount as compensation due to contract cancellation. One must distinguish between:
- a contract, as a means of producing income.= capital
- a contract directed by its performance towards making a profit= revenue in nature
